Some people feel that ERP solutions have a life span of only 5 to 7 years in any organization. This would make necessarily impact the ERP ROI calculations.

Maybe our respective understanding of lifespan differs. I am not
referring to the lifespan as defined by the technology vendor but that of usage within an organization.

Perhaps they are talking of A Specific ERP-
Version Number Instance's Life span of
5-7 years.

Then, maybe Version Upgrades (within the same ERP Manufacturer's Product) should also become the focus for the ROI Analysis.

Atleast in India, An asset's (including an ERP system's) lifespan from an
organizational perspective would be for both functional and
technical utility for much more than 5-7 years, in my humble
opinion.

Consider the following crucial SAP facts :

SAP has moved from R/1 (earlier called
as R) to R/2 to R/3 (and the respective R/3
Version Number Increments over a period
of 32 Years (since SAP's founding in 1972).

It would be a good bet to assume that many of
their earlier R/1, R/2 customers have perhaps
migrated to R/3 and are using the same even
today and plan to continue to do so over the span
of their organizational lives.

My further assumption is that atleast between their 3 ERP Products -
R1, R2 and R3, SAP would have provided Data Mapping and
Conversion Interfaces and Services for their customer's eliminating
possibly a huge pain point in SAP Product and Version Upgrades.

As per a 1999 Wharton School ERP Research
Study, the average calendar time taken for ERP
Implementations in the US was about 21 months
with benefits accruing only after31 months.

In an old Information Week article, Barry Wilderman, an analyst with the Meta Group, says it's
not unusual for ERP investments to result in a negative ROI
over a five-year period.

With such long ERP installation and Payback time spans,
perhaps it is difficult to visualise their average lifespan
of only 5 to 7 years.

SSA's Managing Director in Mumbai had spoken
of ERP Implementations as being 'Organizational
Brain Surgeries'.

It is difficult to digest the fact
that Brain Surgeries are needed every 5-7 years.
They are painful, costly and detrimental to one's
overall body health.

Somebody had compared purchase of a Car to that of an ERP system.

Perhaps the analogy between the Car and ERP
holds good only to the extent both the Roads (On which
Cars travel ) and the final destination (where one
wants to reach ) remain the same.

Email Us : Can we help extend the life of your organization's ERP system ?

In case of ERP's unfortunately, the promised
movement from Organizational's Painful Current
Reality Today (before ERP) to A Future Brighter
Vision (promised after ERP) sometimes derailed.

Even in the age of changing business scenarios, should not the new
business approaches have been perhaps thought out and crystallised
at the time of preparing the ERP Future Vision ?

By possibly a change of Car Drivers (The ERP Teams
), the change of destination (New ERP Objectives) and
also in some cases , the non-availability or the complete
disappearance of roads( changes in industry landscape
and structure).

Lastly, for those interested, there are various online articles that give tips on how
lives of ERP installations can be perhaps extended.
We are still not convinced that an ERP in an
organization would have a lifespan of only
5 to 7 years.( especially so in the case of
Governmental Groups where decision
making is usually slower than the Private
Sector).

There is an old adage in business that you make money on a new
venture only after 1000 days (or roughly 3 years.) It is a pity if
organizations chose to waste resources via churn
of ERP systems, rather than optimize & leverage on the same.

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